Hamish McRae: Reasons to be cheerful? Well, exports are up, rates are low...

If recession is deeply painful, recovery is frustrating and confused as the process periodically pauses

It depends on whether you want to see the glass as half full or half empty. The Bank of England has at last come into line with the consensus view of economists and acknowledged that growth will probably be slower and inflation higher than it had previously forecast.

But it is still forecasting growth of well over 2 per cent next year and expecting that inflation will come down to well within the target range by 2011. For some weeks the general view of economists has been that there will be some sort of slowdown in growth, not just here but in most of the world, including the US, Europe and indeed also China – though there a slowdown means 7 per cent growth rather than 10 per cent.

Whether this will actually constitute, to use the buzzword, a "double dip" is not at all clear. None of the mainstream forecasters are predicting that the major economies will experience another recession, the usual definition of which would be two successive quarters where the economy shrinks. But obviously if there is slower growth generally there must be a danger that some economies will slip back into the minus numbers.

In the UK the picture is complicated by a number of factors. We have a larger fiscal deficit relative to GDP than any other large economy, so we have no option but to tighten fiscal policy, as the coalition plans to do. In the short term at least that is likely to depress growth and it is certainly already depressing sentiment of consumers and businesses alike.

On the other hand we have a relatively competitive currency, which should boost export demand and encourage home production. There is some evidence that exports are at last responding, with the latest figures being very strong. The private sector still seems to be hiring, with employment now rising, though many of the new jobs seem to be part-time. We are also likely to continue to have very low interest rates, particularly if growth slows sharply, and that will give some underpinning to house prices, which recently seem to have softened.

If this does not feel great remember that at this stage of the cycle things never feel great. If recession is deeply painful, recovery is frustrating and confused. Some parts of the economy climb back swiftly, while others languish. And the whole process periodically pauses, and sometimes slips back for a while. So half full or half empty? Let's say two-thirds full, which is better than the other way round.